Debt Instruments - Revision history

Ranisha at 08:33, 11 May 2020

2020-05-11T08:33:02Z

Johanna at 10:57, 8 May 2020

2020-05-08T10:57:10Z

Ranisha: /* Lines of Credit */

2020-05-07T19:50:30Z

‎Lines of Credit

Ranisha at 19:45, 7 May 2020

2020-05-07T19:45:36Z

Ranisha: /* Lines of Credit */

2020-05-07T19:35:13Z

‎Lines of Credit

Ranisha at 13:58, 7 May 2020

2020-05-07T13:58:52Z

Ranisha: /* Challenges */

2020-05-07T13:57:52Z

‎Challenges

Ranisha: /* Case Studies */

2020-05-07T13:57:01Z

‎Case Studies

Ranisha: /* Case Studies */

2020-05-07T13:56:35Z

‎Case Studies

Ranisha: Created page with " = Debt Instruments
= They are used to raise capital for the investment == Term Loan == Term load in provided to fund the acquisition of assets and the payback period ..."

2020-05-07T13:56:11Z

Created page with " = Debt Instruments = They are used to raise capital for the investment == Term Loan == Term load in provided to fund the acquisition of assets and the payback period ..."

New page

= Debt Instruments =

They are used to raise capital for the investment

== Term Loan ==

Term load in provided to fund the acquisition of assets and the payback period is tied to the liftime of the assets. For off-grid solar companies, it is usually provided for a period of 1-25 years. Interest is charge over the lifetime of the loan and can be fixed or floating interest.

=== Benefits ===

*One of the widely employed debt instrument
*Funds can closely match the needs of the borrrower
*Reduce the need and reliance on smaller and less predicatable sources of captial (eg grants)

=== Challenges ===

*Negotiating and securing a loan can be a lengthy process
*Many financinal lenders that provide term loan might not be familiar with the off-grid sector
*Many off-grid companies are startups and do not have the credit history
*Small off-grid assests such as SHS are difficult or time consuming to repossess or sell on the secondary market thus, less willingness to take them as collateral.
*The off-grid sector is continuously developing so the old SHS systems might suffer devaluation, thus less inclination of using them as collateral
*Currency exchange can be limited by the rules of the country.

=== Case Studies ===

==== Rwanda ====

{| style="width:100%" cellspacing="0" cellpadding="1" border="1"
|-
| style="text-align: center; background-color: rgb(79,129,189)" colspan="2" | '''BBOXX''' 
|-
| style="background-color: rgb(219,229,241)" |
''In February 2017, BBOXX announced a $2 million loan from commercial bank Banque Populaire du Rwanda. The loan was unique in that it set aside a fixed portion of BBOXX receivables in an account to which BBOXX customers pay off their SHSs in regular installments. The receivables act as collateral to secure the loan—a first in the OGS sector in Sub-Saharan Africa. ''

''The facility was in local currency, allowing BBOXX to minimize exposure to currency fluctuations by matching the currency of their receivables with the loan. Typically, companies operating in the OGS sector are forced to borrow in hard currencies, because of limited local bank appetite for lending to the sector (as a result of irregular collateral and unfamiliar business models). ''

''This first of its kind loan for a SHS distributor could signal greater participation of local banks in cashflow–based lending to OGS companies. ''

''BBOXX secured another local currency loan in February 2018, a $4 million facility from Union Togolaise de Banque (UTB). In 2019 it secured an $8 million local currency financing facility denominated in Rwanda francs, through the Africa Development Bank (ADB)–backed Facility for Energy Inclusion OffGrid Energy Access Fund (FEI OGEF). BBOXX also announced a $31 million investment from the Africa Infrastructure Investment Managers (AIIM) fund, Africa’s largest project-based investment vehicle''''<ref name="World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.''

|}

@@ Line 1: / Line 1: @@
 = Debt Instruments<br/> =
@@ Line 57: / Line 56: @@
 ''This first of its kind loan for a SHS distributor could signal greater participation of local banks in cashflow–based lending to OGS companies.''
-''BBOXX secured another local currency loan in February 2018, a $4 million facility from Union Togolaise de Banque (UTB). In 2019 it secured an $8 million local currency financing facility denominated in Rwanda francs, through the Africa Development Bank (ADB)–backed Facility for Energy Inclusion OffGrid Energy Access Fund (FEI OGEF). BBOXX also announced a $31 million investment from the Africa Infrastructure Investment Managers (AIIM) fund, Africa’s largest project-based investment vehicle'''<ref name="World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.'''''
+''BBOXX secured another local currency loan in February 2018, a $4 million facility from Union Togolaise de Banque (UTB). In 2019 it secured an $8 million local currency financing facility denominated in Rwanda francs, through the Africa Development Bank (ADB)–backed Facility for Energy Inclusion OffGrid Energy Access Fund (FEI OGEF). BBOXX also announced a $31 million investment from the Africa Infrastructure Investment Managers (AIIM) fund, Africa’s largest project-based investment vehicle'''<ref name="The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies">The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies</ref>.'''''
 |}

@@ Line 17: / Line 17: @@
 *Government-issued mobile bonds
+This article discusses some of the instruments and is based on the publication: [[Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)|Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies (2020)]].
 This article discusses some of the instruments and is based on the publication:[[Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)|Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies]].
 == Term Loan ==
@@ Line 63: / Line 63: @@
 <br/>
 == Lines of Credit ==
@@ Line 70: / Line 71: @@
 They are usually drawn to fund variable expenses of the businesses and are usually unsecured.
 = Further Information =
-*[[Debt_Finance|Debt Finance]]
+*[[Debt Finance|Debt Finance]]
-*[[Portal:Financing_and_Funding|Portal:Financing and Funding]]
+*[[Portal:Financing and Funding|Portal:Financing and Funding]]
 = References =
 <references />

@@ Line 62: / Line 62: @@
 <br/>
 == Lines of Credit ==
-It is a revolving loan that can be drawn/redrawn whenever is requried and is flexible. The borrower can only pay interest on the borrowed amount and the lender charges a maintainence fee on the undrawn amount.
+They are revolving loans that can be drawn/redrawn whenever requried and are flexible. The borrower can only pay interest on the borrowed amount and the lender charges a maintainence fee on the undrawn amount.

@@ Line 1: / Line 1: @@
 = Debt Instruments<br/> =
-They are used to raise capital for the investment
+They are used to raise working capital or investment capital by the businesses. The different types of debt instruments especially for off-grid solar are:
 == Term Loan ==
 Term load in provided to fund the acquisition of assets and the payback period is tied to the lifetime of the assets. For off-grid solar companies, it is usually provided for a period of 1-25 years. Interest is charge over the lifetime of the loan and can be fixed or floating interest.
 === Benefits ===
@@ Line 22: / Line 42: @@
 *Hard currency could be scarce and financing in local currency can be expensive.
 === Case Studies ===
@@ Line 40: / Line 61: @@
 |}
+<br/>
 == Lines of Credit ==

← Older revision		Revision as of 19:35, 7 May 2020
Line 41:		Line 41:


−	==Lines of Credit==	+
		+	== Lines of Credit ==

@@ Line 1: / Line 1: @@
 = Debt Instruments<br/> =
@@ Line 6: / Line 5: @@
 == Term Loan ==
-Term load in provided to fund the acquisition of assets and the payback period is tied to the liftime of the assets. For off-grid solar companies, it is usually provided for a period of 1-25 years. Interest is charge over the lifetime of the loan and can be fixed or floating interest.
+Term load in provided to fund the acquisition of assets and the payback period is tied to the lifetime of the assets. For off-grid solar companies, it is usually provided for a period of 1-25 years. Interest is charge over the lifetime of the loan and can be fixed or floating interest.
 === Benefits ===
 *One of the widely employed debt instrument
-*Funds can closely match the needs of the borrrower
+*Funds can closely match the needs of the borrower
-*Reduce the need and reliance on smaller and less predicatable sources of captial (eg grants)
+*Reduce the need and reliance on smaller and less predictable sources of capital (eg grants)
 === Challenges ===
 *Negotiating and securing a loan can be a lengthy process
-*Many financinal lenders that provide term loan might not be familiar with the off-grid sector
+*Many financial lenders that provide term loan might not be familiar with the off-grid sector
 *Many off-grid companies are startups and do not have the credit history
 *Small off-grid assests such as SHS are difficult or time consuming to repossess or sell on the secondary market thus, less willingness to take them as collateral.
@@ Line 40: / Line 39: @@
 |}

@@ Line 21: / Line 21: @@
 *Small off-grid assests such as SHS are difficult or time consuming to repossess or sell on the secondary market thus, less willingness to take them as collateral.
 *The off-grid sector is continuously developing so the old SHS systems might suffer devaluation, thus less inclination of using them as collateral
-*Currency exchange can be limited by the rules of the country.
+*Hard currency could be scarce and financing in local currency can be expensive.

@@ Line 22: / Line 22: @@
 *The off-grid sector is continuously developing so the old SHS systems might suffer devaluation, thus less inclination of using them as collateral
 *Currency exchange can be limited by the rules of the country.
 === Case Studies ===
@@ Line 30: / Line 31: @@
 |-
 | style="background-color: rgb(219,229,241)" |
-''In February 2017, BBOXX announced a $2 million loan from commercial bank Banque Populaire du Rwanda. The loan was unique in that it set aside a fixed portion of BBOXX receivables in an account to which BBOXX customers pay off their SHSs in regular installments. The receivables act as collateral to secure the loan—a first in the OGS sector in Sub-Saharan Africa. ''
+''In February 2017, BBOXX announced a $2 million loan from commercial bank Banque Populaire du Rwanda. The loan was unique in that it set aside a fixed portion of BBOXX receivables in an account to which BBOXX customers pay off their SHSs in regular installments. The receivables act as collateral to secure the loan—a first in the OGS sector in Sub-Saharan Africa.''
-''The facility was in local currency, allowing BBOXX to minimize exposure to currency fluctuations by matching the currency of their receivables with the loan. Typically, companies operating in the OGS sector are forced to borrow in hard currencies, because of limited local bank appetite for lending to the sector (as a result of irregular collateral and unfamiliar business models). ''
+''The facility was in local currency, allowing BBOXX to minimize exposure to currency fluctuations by matching the currency of their receivables with the loan. Typically, companies operating in the OGS sector are forced to borrow in hard currencies, because of limited local bank appetite for lending to the sector (as a result of irregular collateral and unfamiliar business models).''
-''This first of its kind loan for a SHS distributor could signal greater participation of local banks in cashflow–based lending to OGS companies. ''
+''This first of its kind loan for a SHS distributor could signal greater participation of local banks in cashflow–based lending to OGS companies.''
-''BBOXX secured another local currency loan in February 2018, a $4 million facility from Union Togolaise de Banque (UTB). In 2019 it secured an $8 million local currency financing facility denominated in Rwanda francs, through the Africa Development Bank (ADB)–backed Facility for Energy Inclusion OffGrid Energy Access Fund (FEI OGEF). BBOXX also announced a $31 million investment from the Africa Infrastructure Investment Managers (AIIM) fund, Africa’s largest project-based investment vehicle''''<ref name="World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.''
+''BBOXX secured another local currency loan in February 2018, a $4 million facility from Union Togolaise de Banque (UTB). In 2019 it secured an $8 million local currency financing facility denominated in Rwanda francs, through the Africa Development Bank (ADB)–backed Facility for Energy Inclusion OffGrid Energy Access Fund (FEI OGEF). BBOXX also announced a $31 million investment from the Africa Infrastructure Investment Managers (AIIM) fund, Africa’s largest project-based investment vehicle'''<ref name="World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.'''''
 |}

@@ Line 24: / Line 24: @@
 === Case Studies ===
 {| style="width:100%" cellspacing="0" cellpadding="1" border="1"
 |-
-| style="text-align: center;  background-color: rgb(79,129,189)" colspan="2" | <span style="color: rgb(255,255,255)">'''BBOXX'''</span><br/>
+| style="text-align: center;  background-color: rgb(79,129,189)" colspan="2" | <span style="color: rgb(255,255,255)">'''BBOXX (Rwanda)'''</span><br/>
 |-
 | style="background-color: rgb(219,229,241)" |

Debt Instruments - Revision history

Ranisha at 08:33, 11 May 2020

Johanna at 10:57, 8 May 2020

Ranisha: /* Lines of Credit */

Ranisha at 19:45, 7 May 2020

Ranisha: /* Lines of Credit */

Ranisha at 13:58, 7 May 2020

Ranisha: /* Challenges */

Ranisha: /* Case Studies */

Ranisha: /* Case Studies */

Ranisha: Created page with " = Debt Instruments = They are used to raise capital for the investment == Term Loan == Term load in provided to fund the acquisition of assets and the payback period ..."

Ranisha: Created page with " = Debt Instruments
= They are used to raise capital for the investment == Term Loan == Term load in provided to fund the acquisition of assets and the payback period ..."